Green v. Johnson

• Citation: 249 S.W.3d 313
• Decision Date: 13 March 2008
• Docket Number: No. E2006-02666-SC-R11-CV.,E2006-02666-SC-R11-CV.
• Parties: Lisa Dawn GREEN et al. v. Vicki Renee JOHNSON et al.
• Court: Supreme Court of Tennessee

249 S.W.3d 313

Lisa Dawn GREEN et al. v. Vicki Renee JOHNSON et al.

No. E2006-02666-SC-R11-CV.

Supreme Court of Tennessee, at Knoxville.

January 8, 2008 Session.

March 13, 2008.

Annie S. Duncan and C. Edward Daniel, Knoxville, Tennessee, for the appellants, Lisa Dawn Green, Ronald Keith Green, Dustin Dillard Green, Hunter Green, and Kyra Green.

Dallas T. Reynolds, Knoxville, Tennessee, for the appellee, State Farm Mutual Automobile Insurance Company.¹

OPINION

CORNELIA A. CLARK, J., delivered the opinion of the court, in which WILLIAM M. BARKER, C.J., and JANICE M. HOLDER, GARY R. WADE, and WILLIAM C. KOCH, JR., JJ., joined.

We granted permission to appeal in this case to determine whether an uninsured motorist carrier may reduce amounts owed under an uninsured motorist provision by the amount of settlement proceeds an insured receives from a non-motorist defendant. Because the uninsured motorist statutes, codified at Tennessee Code Annotated sections 56-7-1201 to -1206, unambiguously allow an uninsured motorist carrier to limit its liability by "the sum of the limits collectible under all liability and/or primary uninsured motorist insurance polices, bonds, and securities applicable to the bodily injury or death of the insured," Tenn.Code Ann. § 56-7-1201(d), and to receive an offset or credit for "the total amount of damages collected by the insured from all parties alleged to be liable for the bodily injury or death of the insured," id. § 1206(i), we conclude that the uninsured motorist carrier in this case is entitled to an offset for the monies the insured received from the non-motorist defendants. Accordingly, we affirm the decisions of the trial court and Court of Appeals.

Factual and Procedural History

The material facts of this case are not in dispute. Just after 3:00 a.m. on September 28, 2002, Lisa Green ("Mrs.Green") was struck by an automobile while walking in a marked crosswalk at the intersection of Cumberland Avenue and Nineteenth Street in Knoxville.² Vicki Johnson, the eighteen-year-old driver of the vehicle, was intoxicated when she ran a red light and struck Mrs. Green. Tabatha³ Connor, a passenger and co-owner of the vehicle, was also intoxicated. Both Ms. Johnson and Ms. Connor had previously been drinking at The Pub, a local tavern near the scene of the accident.

Seeking compensation for their injuries, on October 9, 2002, Mrs. Green, her husband, and their minor children filed suit against: Ms. Johnson; Tabatha Connor and Carroll Blankenship, the alleged owners of the vehicle; KJC of Knoxville, Inc., d/b/a The Pub; and Chad Matthew Corcoran and Stuart Jason Myers, employees at The Pub who sold Ms. Johnson and Ms. Connor alcohol. The Greens alleged that, under the doctrines of negligence, agency, and comparative fault and pursuant to the Dram Shop statutes, Tenn.Code Ann. §§ 57-10-101, -102 (2004), The Pub, its employees, Vicki Johnson, Tabatha Connor, and Carroll Blankenship were all liable for their injuries.

On May 27, 2005, an Order of Default Judgment was entered against Ms. Johnson and Ms. Connor.⁴ Included in the Order was the trial court's determination that Mrs. Green was entitled to compensatory damages in the amount of $3,650,000.00 and punitive damages in the amount of $1,000,000.00. Additionally, the trial court determined that Ms. Johnson and Ms. Connor were 65% at fault and The Pub, Mr. Corcoran, and Mr. Myers were 35% at fault.⁵ Finally, the trial court noted that The Pub and its employees had entered into a settlement with the Greens ("the Settlement")⁶ and that all matters pertaining to uninsured motorist benefits and whether Ms. Johnson and Ms. Connor were uninsured were reserved for a later hearing.⁷

At the time of the accident, the Greens carried an insurance policy ("the Policy") with State Farm Mutual Automobile Insurance Company ("State Farm"). The Policy included uninsured motor vehicle coverage, the limits of liability being $50,000.00 per person, $100,000.00 per accident.⁸ The Policy covered the "compensatory damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle." The Policy also stated that "[i]f the limits of liability under this [policy] are the minimum limits required by law, . . . any amount payable under this section shall be reduced by any amount paid or payable to or for the insured: (a) by or for any person or organization who is or may be held legally liable for the bodily injury . . . sustained by the insured." (emphases added).

Pursuant to the Policy, on August 28, 2006, State Farm filed a motion for summary judgment on the grounds that it had been relieved of all liability under the terms of the Policy.⁹ Although conceding that neither Ms. Johnson nor Ms. Connor had automobile insurance at the time of the accident and, as such, that the Policy was applicable, State Farm asserted that: (1) its "total exposure" under the Policy was $50,000.00; (2) the Greens' settlement proceeds from other sources were equal to or greater than $50,000.00; and (3) pursuant to the uninsured motorists statutes, it was entitled to offset, or reduce its coverage amount by, any amounts the Greens collected from all other liable parties. State Farm argued that, because the $50,000.00 limit of liability due under the Policy should be offset by the $50,000.00 or more the Greens received from the Settlement, it was relieved of all obligations under the Policy and therefore was entitled to summary judgment as a matter of law.

The trial court agreed and granted State Farm's motion for summary judgment. The Greens appealed, arguing that, pursuant to Tennessee Code Annotated sections 56-7-1202(a)¹⁰ and -1205¹¹ (2000) and Sherer v. Linginfelter, 29 S.W.3d 451 (Tenn.2000), State Farm "has subrogation or set off [sic] rights only as to payments made on behalf of an uninsured/underinsured motorist." (emphasis added). Because the Settlement was to compensate them for non-motorists `liabilities, the Greens argued that State Farm could not reduce its liability under the Policy. The Court of Appeals, however, found the Greens' reliance on Sherer misplaced and their interpretation of Tennessee Code Annotated section 56-7-1205 unpersuasive. Instead, the Court of Appeals held that prior appellate decisions discussing the uninsured motorist statutes clearly allow State Farm to reduce the amount owed under the Policy by the amounts the Greens received from the Settlement.

We granted the Greens' application for permission to appeal to determine whether an uninsured motorist carrier may reduce its liability under an uninsured motorist provision of an automobile insurance policy by the amount of settlement proceeds received by the insured from a non-motorist defendant, who is alleged to share responsibility for the bodily injury of the insured.

Standard of Review

The trial court's grant of summary judgment, predicated on its interpretation of the uninsured motorist statutes, Tenn. Code Ann. §§ 56-7-1201 to -1206, is purely a question of law. Cumulus Broad., Inc. v. Shim, 226 S.W.3d 366, 373 (Tenn. 2007); Mooney v. Sneed, 30 S.W.3d 304, 306 (Tenn.2000). Accordingly, our review is de novo, and no presumption of correctness attaches to the lower courts' judgments. Cumulus Broad., 226 S.W.3d at 373. A grant of summary judgment, however, is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04.

Analysis

In their appeal to this Court, the Greens contend that no offset should be allowed in this case because the Settlement proceeds are from non-motorist defendants. They argue that it would be contrary to the intent of the legislature to allow an uninsured motorist carrier to receive an offset for amounts received from parties other than "owners or operators of uninsured motor vehicles." Tenn.Code Ann. § 56-7-1201(a). To support their argument, the Greens cite to Sherer v. Linginfelter, 29 S.W.3d 451 and Tennessee Code Annotated section 56-7-1205.

Sherer v. Linginfelter

The Greens first cite to this Court's holding in Sherer that the uninsured motorist coverage provisions are for "the protection of persons insured thereunder who are legally entitled to recover compensatory damages from owners or operators of uninsured motor vehicles because of bodily injury." Sherer, 29 S.W.3d at 454 (citing Tenn.Code Ann. § 56-7-1201(a)) (emphasis added). As the Greens reason, because the amounts they received from the Settlement are not from owners or operators of uninsured motor vehicles, it would be contrary to the intent of the General Assembly to allow State Farm to offset its liability by those amounts. We disagree.

In Sherer, this Court held, pursuant to Tennessee Code Annotated sections 56-7-1201(a) and -1204 (2000), that an uninsured motorist carrier's subrogation rights are limited to only those injuries for which the provider made payment to the insured. 29 S.W.3d at 454. More specifically, the Greens argue that the Sherer Court did not allow the uninsured motorist carrier to limit its liability by the amounts the insured received from a non-motorist tortfeasor. Id. However, the Greens' reliance on Sherer is misplaced. First, Sherer dealt with an insurer's subrogation rights pursuant to Tennessee Code Annotated section 56-7-1204.¹² Id. The instant case does not involve subrogation; therefore, section 1204 is not applicable. Second, Sherer dealt with damages recoverable in a products liability action for "enhanced injuries."¹³ Id. at 453. Such injuries are not at issue in the instant case. For these reasons, Sherer is not helpful to our resolution of this case.

Instead, we find this Court's holding in Poper ex rel. Poper v. Rollins, 90 S.W.3d 682 (Tenn.2002), to be dispositive. In Poper, a motorist died from injuries she sustained in a multi-vehicle accident. The decedent's husband filed wrongful death actions against...